Senate to consider bill to lower Gross Receipts Tax from 5% to 4.5%

ST. CROIX - The Senate Finance Committee this afternoon is scheduled to consider a bill that would lower the Gross Receipts Tax.

The bill, sponsored by Sen. Alicia Hansen, would cut the Gross Receipts Tax from 5 percent to 4.5 percent.

While the measure would provide a break to business owners, government officials currently are scrambling to find ways to beef up government revenue.

The measure is being considered against the backdrop of a looming $40 million budget shortfall for the current fiscal year, the day after lawmakers met with the governor and his financial team behind closed doors to try to find ways of lowering government expenses and increasing revenue to bridge that gap.

Government House spokesman Jean Greaux Jr. would not say on Monday what Gov. John deJongh Jr.'s position on the bill is. However, the governor pushed hard to get the tax increased to its current level.

In a prepared statement, Hansen said she thinks the Gross Receipts Tax needs to go down by half a percentage point "before the business community collapses."

"The increase to 5 percent was meant to be temporary. It's been over two years since we've had this hike. It's now time to reduce it back down," she said.

Business owners are required to pay Gross Receipts taxes on any revenues coming into their business.

The Gross Receipts Tax rate had been 4 percent before senators passed two hikes in the tax in the last three years, bringing it to 5 percent, which amounts to a 25 percent increase.

DeJongh started pushing for the 25 percent increase in his State of the Territory Address in January 2011.

Senators were more reluctant though, and first raised the tax from 4 percent to 4.5 percent in March 2011. After that, senators more than once refused the governor's request to raise the tax to the full 5 percent he wanted.

Ultimately, though, the 29th Legislature voted in February 2012 to increase the tax to 5 percent. That increase went into effect March 1, 2012, and was to remain in place until corporate income taxes reached a level of $185 million.

It was not clear on Monday what level those taxes have reached at this point.

Hansen contends that if local businesses continue to close their doors at the rate they have been, more will be lost in tax dollars than gained with the higher Gross receipts Tax.

She suggested that other measures could make up the budget shortfall, such as developing internet gaming and imposing a luxury tax, she said in her statement.

Invited testifiers on the bill include Mark Eckard of the St. Croix Chamber of Commerce; Joe Hollins of Tip Top Construction; and Violet Anne Golden, acting chairwoman of the Casino Control Commission.

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